Custodian REIT has increased its industrial weighting after paying £11m for a 92,000 sq ft Scottish distribution facility let to Gist.
The deal for the building, which is situated between Glasgow and Edinburgh on the M8, reflects a net initial yield of 5.25%.
Gist, the national distribution firm, has five years remaining on its lease and three years to a break option, paying a passing rent of £623,160 per annum.
The acquisition was funded from the REIT’s existing debt facilities, increasing net gearing to 24% LTV, within the REIT’s 25% target.
This acquisition increases the industrial weighting within the company’s highly diversified portfolio of 165 properties to 48% by value.
Custodian Capital managing director Richard Shepherd-Cross said: “This well-located, modern industrial asset has been acquired off-market at an attractive net initial yield of 5.25%. We see scope to significantly increase the rental intake of this conservatively let asset based on recent local comparables combined with strong occupational demand, meaning we expect the reversionary yield on purchase price to move towards 7%. This purchase highlights the yield advantage offered by the company’s smaller regional property strategy of acquiring strong and secure assets with the potential for future income and valuation growth.”
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